Term Finance Loses $8.5M After Governance Attack
An attacker gained governance control of Term Finance vaults and drained about $8.5 million, including roughly 2,843 ETH and 1.68 million USDC, security firms reported.
Security firms PeckShield and CertiK reported that an attacker gained governance control of Term Finance’s vaults on Sunday and drained about $8.5 million, consisting of roughly 2,843 ETH and 1.68 million USDC. The USDC was exchanged for about 1.68 million DAI.
Blockchain analytics indicate the theft represented about 68% of the $12.45 million held in Term’s vault product before the incident and almost all of the protocol’s roughly $8.8 million in Ethereum deposits.
Onchain monitoring service Defimon found the attacker acquired a majority of a sparsely held governance token at low cost and used the resulting voting power to approve proposals that granted control over the vaults. Term has not confirmed how voting control was obtained or which governance functions were used.
The affected vault contracts use Yearn V3 infrastructure. Yearn reported the exploit involved a custom governance wrapper created for Term and stated the attack vector does not apply to standard Yearn vault setups.
Term Labs told investigators it had “irreversibly shut down all Term Meta Vaults and revoked their DAO governance roles, permanently preventing further deposits while keeping withdrawals open.” The company added that, based on its investigation so far, “the underlying Term protocol and its direct borrowing and lending markets were unaffected.” Term also said it is coordinating with external security teams on asset recovery and remediation and will “explore paths to address” any remaining shortfall.
Term blocked new deposits into the Meta Vaults while leaving withdrawals available. The protocol said it will seek third‑party validation for future critical updates and increase governance transparency.
In April 2025, an oracle error caused about 918 ETH in unintended liquidations; Term recovered roughly 556 ETH, reducing the final loss to about 362 ETH and reimbursing affected users, according to the company’s postmortem.
Investigations into the recent governance exploit are ongoing as Term and external security teams work on recovery and remediation.
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